With so many shares to choose from on the ASX, it can be hard to decide which ones to buy.

The good news is that brokers across the country are doing a lot of the hard work for you.

Three top shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

National Australia Bank Ltd (ASX: NAB)

According to a note out of UBS, its analysts have retained their buy rating and $20.50 price target on this banking giant’s shares following its provisions update. UBS remains positive despite NAB revealing that its second half result will be reduced by a net increase in provisions and impairments of $642 million. It likes the bank due to its experienced management team and strong balance sheet. The latter leaves it well-placed to navigate the tough economic environment. I agree with UBS and feel NAB is worth considering.

Qantas Airways Limited (ASX: QAN)

Analysts at Goldman Sachs have retained their buy rating and $5.28 price target on this airline operator’s shares following its annual general meeting update. According to the note, the broker is becoming more confident that a re-opening of Australian domestic aviation markets will occur pre-Christmas. This follows low community transmission of COVID-19, recent moves to relax border restrictions, and the introduction of tourism stimulus. It feels Qantas will benefit greatly from this due to its leadership position in the domestic market. I think Goldman Sachs is spot on and Qantas could be a great option.

Webjet Limited (ASX: WEB)

A note out of Ord Minnett reveals that its analysts have retained their buy rating and lifted the price target on this online travel agent’s shares to $4.58. This follows the release of its trading update last week. Ord Minnett notes that its cash burn is improving and expects this to continue to be the case as domestic borders open. It also expects Webjet to benefit from pent up demand in the tourism sector. While the broker makes some great points, I feel Webjet’s shares are still expensive and would prefer to invest at a much cheaper price.

More reading

• Why Coca-Cola Amatil, CSR, Link, & Qantas shares are storming higher
• AMP (ASX:AMP) asset sales part of wealth sector transformation
• These are the 10 most shorted shares on the ASX
• ASX 200 Weekly Wrap: ASX snaps winning streak… just
• 3 important rules to help you build wealth

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Leading brokers name 3 ASX shares to buy today appeared first on Motley Fool Australia.

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The Australian retail sector showed some momentum coming into the quarter ended 30 September 2020. Retail turnover increased marginally year on year in each of June and July. But Victorian COVID-19 shutdowns have taken a toll, with turnover falling by 4% in August. The impacts of changing consumer spending patterns are uneven, and ASX retailers are facing a volatile environment. As Deloitte reports, they must cope with monthly swings in spending and gulfs in performance by sector and across states. 

Demand for recreational goods, electronic and electrical goods, and hardware and garden supplies have surged. According to Deloitte, these categories posted gains of more than 30% in July compared to pre-COVID levels. Retailers with a strong digital presence have also benefitted from the shift to online shopping. But spending levels vary significantly across states. While Western Australia and Queensland have benefitted from eased restrictions, retailers in Victoria are only just looking to reopen physical stores after long closures.

With that in mind, let’s take a look at how ASX retail shares performed in the last quarter.

Kogan.com Ltd (ASX: KGN) 

Kogan has seen sales soar as a result of the pandemic. The online-only retailer saw August sales grow 117%, year-on-year, with profit up 165% over the same period. Active customers grew to 2,461,000 at the end of August. This represents an increase of 152,000 for the month, the largest monthly increase in Kogan’s history. The Kogan share price has likewise climbed, almost doubling during the most recent quarter. 

Kogan’s August results come on top of an impressive set of full-year numbers. FY20 sales were up 39.3% to $768.9 million. Profits climbed 55.9% to $26.8 million. Repeat orders are rapidly accelerating as customers access loyalty benefits and the breadth of Kogan’s offering. Recently acquired customers are expected to contribute to future sales growth as they become repeat customers. A significant investment in Kogan’s platform and marketing activities has delivered an immediate impact on customer growth, which the company expects to have long-term benefits. 

Kogan finished the year with a cash balance of $146.7 million and an undrawn bank debt facility. This leaves it well positioned to grow its exclusive brands business and scale Kogan Marketplace (which allows third parties to sell products via Kogan’s platform). Kogan also plans to continue to invest in new verticals including Kogan Internet, Kogan Mobile, Kogan Money, and Kogan Travel. The company will provide its next business update at its annual general meeting on 20 November 2020. 

JB Hi-Fi Limited (ASX: JBH) 

Store closures have had little impact on JB Hi-Fi’s sales this year, which soared 11.6% to $7.92 billion in FY20. The electronics retailer had a strong year in the most challenging of times, with profits jumping 33% to $332.7 million. JB Hi-Fi played a vital role in supplying Australians with the tools they needed to work, study, and entertain themselves at home, despite operations being impacted by COVID-19. The JB Hi-Fi share price has followed sales upward, climbing more than 26% over the last quarter. 

Australian JB Hi-Fi sales were up 12.5% to $5.32 billion in FY20. Sales momentum was strong and increased toward the end of the financial year. Online sales grew 56.6% to $404 million or 7.6% of total sales. Increased sales combined with cost controls more than offset additional operating costs associated with ensuring safety during the pandemic. 

The Good Guys business grew sales by 11.2% to $2.39 billion, with sales accelerating in the fourth quarter as customers upgraded home appliances and entertainment options. Online sales grew 33% to $174.2 million or 7.3% of total sales. In New Zealand, however, JB Hi-Fi sales were down 5.7% to NZ$222.8 million. Sales in the final quarter were materially impacted by New Zealand government restrictions. Positively, online sales grew 53.3% to NZ$20.4 million, or 9.1% of all sales. A $24 million impairment was recorded against the New Zealand assets in light of past performance and ongoing uncertainty arising from the current economic environment. 

Temple & Webster Group Ltd (ASX: TPW) 

Temple & Webster has reported a strong start to FY21, with revenue to 19 October 2020 up 138% on the prior corresponding period. First quarter earnings before interest, taxes, depreciation and amortisation (EBITDA) were $8.6 million – which is greater than the retailer’s full-year FY20 EBITDA. October revenue growth is still in excess of 100% as the retail sector enters its peak trading months. The Temple & Webster share price nearly doubled in the quarter ended 30 September, but took a dive in October with reported growth failing to meet market expectations. 

The Temple & Webster share price has risen strongly this year as the online-only furniture retailer leverages the accelerated shift to digital. This saw Temple & Webster added to the S&P/ASX 300 (ASX: XKO) in the September quarter rebalance. In July the company, which is the largest in Australia’s e-commerce furniture and homewares market, announced a strong set of full year results driven by a growing online audience. Active customer numbers crossed the 500,000 milestone in that month, meaning some half a million Australian homes contain something from Temple & Webster. 

In FY20, Temple & Webster increased revenue by 74% to $176 million. EBITDA more than quadrupled, coming in at $8.5 million versus $1.5 million in FY19. This resulted in a profit after tax of $13.9 million (including an income tax benefit of $5.9 million). The retailer ended the financial year with cash of $38.1 million and no debt. This strong balance sheet will protect the company in a down-side scenario, but also allow it to pursue strategic opportunities as they arise.  

More reading

• Is Temple & Webster Group Ltd (ASX:TPW) still a buy?
• 5 major ASX 200 events this week
• The best time to invest may feel uncomfortable
• 5 things to watch on the ASX 200 next week
• Got $1,000? You should buy one of these 8 ASX shares

Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia has recommended Kogan.com ltd and Temple & Webster Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post How did ASX retail shares perform in the latest quarter? appeared first on Motley Fool Australia.

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If you’re not yet acquainted with Charlie Munger, Warren Buffett’s right hand man for decades at Berkshire Hathaway Inc (NYSE:BRK-A)(NYSE:BRK-B), stop reading this, jump online and order a copy of Poor Charlie’s Almanack.

I’ll wait. (While I’m waiting, a disclosure that I own shares of Berkshire.)

You’re back? Good. Let’s keep going.

Munger is perhaps the highest profile high-level polymath I know. (I’m sure there are others, but this isn’t a competition. Suffice it to say the man is bloody smart, incredibly well-read and possesses an uncommon common sense.)

He also has a sharp wit, and is very funny.

Munger has said many, many things worth repeating (did I mention you should buy the book?), but in this case I want to highlight one of the things he’s better known for: his view on incentives.

Tell ’em what you said, Charlie:

“Show me the incentive and I will show you the outcome.”

and…

“Never, ever, think about something else when you should be thinking about the power of incentives.”

Oh, and:

“I think I’ve been in the top 5 per cent of my age cohort all my life in understanding the power of incentives, and all my life I’ve underestimated it.”

It’s worth taking those three, in order.

First: incentives matter. Sometimes, they’re all that matter.

Think about a CEO with a good moral compass. Her bonus, performance review and her future employment are being judged against this year’s result.

Now imagine that CEO is confronted with a choice, 6 weeks out from the end of the financial year: to cut the price to get a deal done, now, or get full price for the same deal in 3 months’ time.

What do you reckon she does?

No, she doesn’t say “Screw the future, who cares!”

But she finds a way to convince herself to do the deal. She rationalises it. “A bird in the hand is worth two in the bush”, is one way. Or, for the more aggressive CEO: “I’ll do the deal now and back myself to find another deal in future to make up for it”.

It feels rational. It feels acceptable. Hell, she even tells herself it’s a better outcome for the business. And believes it.

Second, incentives matter, more than almost anything.

You can put whatever ‘rules’, ‘ethics training’ or ‘policies’ in place (yes, they’re in air quotes for a reason), but if you set up a scheme of payment or advancement that runs counter to those, it’ll be the incentives that win.

Take the recent Westpac AUSTRAC palava that ended up in a $1.3 billion fine. I ask you: do you think there might have been different outcomes if past board members and previous management were incentivised to do things that made such an outcome all-but impossible?

How much could compliance really have cost? $10 million? $100 million? 

Conversely, there were incentives for increasing then-current-year profits, and keeping the ‘cost to income’ ratio down.

Lastly, Charlie’s warning: Despite incentives being his Mastermind subject, Munger is humble and realistic enough to know that even he has underestimated the power of incentives throughout his life.

Which suggests, almost by definition, that you and I are doing the same.

Think about how long it took for the tobacco industry to come clean about the damage of smoking.

And how long it took for politicians to actually want to accept the same thing.

And yes, consider how hopelessly conflicted the financial services industry is.

Think about the kickbacks a planner used to get for recommending certain products.

Think about the incentives that still exist for the planner’s dealer group or network.

Think about the fact that a recent ASIC study found that bank-related planners tended to – surprise, surprise! – think their own bank’s products were best for their clients.

Think about the fact your planner, adviser or fund manager takes money from your portfolio, rather than asking you to hand over the cash or give them your credit card number. Imagine how our behaviour would change if the latter was required rather than the former.

Think about the fact that your stockbroker makes money not on whether your investments are profitable, but on how many trades you make.

(Yes, even the online guys. And yes, even the new ones.)

Think about how ‘free’ brokerage is being paid for (hint: you’re the product in one way or another).

Now, think about the alternatives.

Who’s going to create financial products that are genuinely in your interest, given the motivation to instead create products that let them make money from you.

Who’s going to create a new brokerage that actually encourages you to develop good financial habits?

Who’s going to create a financial product that – rather than making it easier for you to borrow from the future – encourages you to actually not buy those jeans?

Which financial products are aiming to lower costs, rather than increase them?

Which companies, hiding behind slick marketing schemes, are going to come clean about the only-slightly-tangential benefits of ‘ethical’ investing?

Hint: if they existed, the industry wouldn’t spend millions on marketing – and incentives! – each year!

A pipe-dream?

Yep, it is. It’s not going to happen.

So it’s up to us.

You and me.

We need to be alert to the tricks, sleight-of-hand and conveniently opaque information.

We need to know we’re being sold to, at least as much as we’re being helped.

We need to remember that the incentives of others usually don’t align with our best interests!

At The Motley Fool, we charge for our advice. It’s an annual fee.

If we’re not helping our members, they don’t renew.

We’re not perfect. We make mistakes.

But our incentives are aligned with yours. Because if you don’t like us, you just walk away at the end of your term.

We have no incentive to get you to overtrade. 

We don’t take our membership fee from your portfolio, and hide it on page 3 of your annual statement.

We provide our scorecards, in full – every single winner and loser, ever – to members of each of our services.

To be clear, there are some wonderful stockbrokers, financial advisers, fund managers and bankers.

And there are some terrible people in the ‘investment newsletter’ industry that we’re part of.

But it’s important that you keep Charlie Munger’s words front of mind in any and every interaction with the financial services industry.

Don’t be scared off, but please, be careful.

Fool on!

More reading

• 3 shares with intelligent fanatics I would invest in today
• 3 Warren Buffett quotes you need to read this week

Scott Phillips owns shares of Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $200 calls on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Don’t listen to me. Listen to Charlie Munger… appeared first on Motley Fool Australia.

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ASX technology, e-commerce and biotech shares have dominated the financial headlines in the wake of the global pandemic. And for good reason.

With demand for their goods and services soaring as people work, shop and socialise from home – and with the world holding its breath for a COVID vaccine– the well-placed companies in these industries have seen their share prices soar.

But there’s been another, more subtle shift happening that’s drawn far less media attention.

The pandemic, and subsequent lockdowns and social distancing, exposed unforeseen weaknesses in brick and mortar retailers and office towers. This continues to put pressure on the share prices of these businesses, and their landlords.

The call of the outback

Primewest Group Ltd (ASX: PWG) holds assets in both of these sectors, as well as industrial and tourist facilities.

But in June 2020, Primewest expanded its reach when it acquired the asset management of Vitalharvest Freehold Trust (ASX: VTH). The Australian real estate investment trust (REIT) offers investors exposure to Australian agricultural property assets. It owns Australia’s largest collection of berry and citrus farms, 100% leased to Costa Group Holdings Ltd (ASX: CGC).

Year to date, the Vitalharvest share price is up 2% and the Costa Group share price is up 46%. That compares to a 6% loss for the All Ordinaries Index (ASX: XAO).

As the Australian Financial Review (AFR) reports, Primewest Managing Director, David Schwartz, is bullish on Australia’s agricultural outlook, saying:

People are worried about COVID and its impact on office and retail property, and who will come back into these properties, but everyone has to eat… We are finding there is plenty of appetite for the right farms. Investors have been a little hesitant to take on the farming risk. But you can eliminate that risk with water rights or access to water. We invest in properties where that risk is reduced.

Steve Jarrott, portfolio manager of Warakirri’s diversified agricultural fund is equally optimistic:

In our view, an increasing global demand for food, particularly in Asia, provides an opportunity for Australian agriculture to capitalise on its competitive advantages and future growth prospects… The pandemic has shone a greater spotlight on the ag industry, highlighting the fact that ag is a resilient, essential service/industry and a valuable, profitable asset class.

Then there’s Elders Ltd (ASX: ELD), which the AFR notes has sold more than $1 billion worth of farmland for four years running.

According to Tom Russo, general manager for real estate at Elders:

In the farmland space, we are continuing to witness extreme levels of demand on the buy side during a period where listings are constrained. We may well see some commodity price volatility as a result of COVID-19 impacts and international trade issues. However my observation is that investors continue to remain confident in the strong long-term fundamentals of farmland investment.

The Elders share price fell less than 12% during the COVID market panic. Year to date, it’s up a remarkable 78%.

We’ll round the list off with Rural Funds Group (ASX: RFF), which owns a diversified portfolio of quality Australian agricultural assets including cattle ranches and macadamia farms.

Rural Funds has a great history of long-term share price growth going back to 2014. Year to date, the Rural Funds share price is up 23%.

No matter your ASX investment choices, remember…

Whether you’re investing in the growth story of ASX technology shares, the rebound of beaten down travel and leisure shares, or straightforward index tracking exchange-traded funds (ETFs), remember, ‘time in the market beats timing the market.’

Yes, it’s a cliché.

And yes, you’ll hear the odd story of the fund manager who shorted the market on 21 February before going long on 23 March. But that kind of successful market timing is the extreme exception to the rule. And, to my knowledge, one that nobody has ever repeated consistently over the long haul.

Many investors trying to time market cycles earlier this year, for example, would have held on until share prices dropped 20% or more before selling. And then they would have sat on the sidelines and waited until share prices had rebounded 10% before buying back in. In other words, losing money even as they lost sleep.

If you’ve paid off any high interest debts, earn a sustainable income and have at least three months of emergency cash set aside (depending on your individual circumstances), history shows you’re almost always better off holding on tight through the dips and peaks rather than trying to jump in and out of your share holdings. Assuming, of course, that your investment horizon is at least five years.

A question of when, not if

It’s the same story with the multi-trillion-dollar fiscal stimulus package still being debated in the United States.

Lindsey Bell is the chief investment strategist at Ally Invest, based in North Carolina. Discussing recent share price moves she said (as quoted by the AFR):

This has been a stimulus-driven market for several weeks – today is more evidence of that. The market believes we are getting a stimulus. But it wants to know when it’s going to pass because it’s going to take time for the money to flow out.

Bell’s assessment of the market is spot on.

For me, the real takeaway here is that she points out investors believe stimulus is coming but they want to know when the spending package is going to pass. Why? Because they’re hoping to time their entries and exits with the idea of maximising their gains. An endeavour the majority will likely fail at.

As I’ve been writing for the past weeks of this stimulus-driven market, the US government stimulus package will come. As will oodles more stimulus spending from developed nations across the world to keep their economies ticking through the pandemic slowdowns.

Since, in my opinion, it’s not a question of if but one of when the next big stimulus packages are announced, I’ll be holding onto the shares I already own that I believe are well positioned over the long-term. And adding to those shareholdings when I’m able, without worrying about getting the timing down perfectly.

Happy investing.

More reading

• 2 high yield ASX dividend shares for income investors to buy today
• Don’t worry about low interest rates, just buy these ASX dividend shares
• Why Rural Funds (ASX:RFF) is a great ASX dividend share
• Invest your Suncorp dividends in these ASX shares today
• 2 of the best ASX dividend shares you can buy in October

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO and RURALFUNDS STAPLED. The Motley Fool Australia has recommended Elders Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Extreme levels of demand AND future growth prospects. Are you invested in these niche ASX shares? appeared first on Motley Fool Australia.

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In early afternoon trade the S&P/ASX 200 Index (ASX: XJO) has given back the majority of its morning gains and is trading just slightly higher. At the time of writing the benchmark index is up 1.8 points to 6,168.8 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

Adore Beauty Group Ltd (ASX: ABY)

The Adore Beauty share price is sinking 7% lower to $6.42. This decline means the newly listed online beauty retailer’s shares are now trading below their IPO price of $6.75. Concerns over the reasonably lofty multiples that its shares trade at appear to be behind this decline.

Adairs Ltd (ASX: ADH)

The Adairs share price has tumbled 6.5% to $3.61. This follows the release of the furniture retailer’s trading update this morning. As of October 25, Adairs’ total sales were up 22% over the prior corresponding period year to date. This was driven largely by its online segment, which reported a 134% increase in sales. No guidance was given for FY 2021. Investors may have been expecting even stronger growth.

Marley Spoon AG (ASX: MMM)

The Marley Spoon share price has crashed 25% lower to $2.62. This follows the completion of a $56 million institutional placement and the release of its third quarter update. In respect to the latter, Marley Spoon delivered more strong growth over the prior corresponding period. However, its growth over the prior quarter was negligible. Investors may be concerned the subscription-based meal kit provider’s sales growth has now peaked.

Resolute Mining Limited (ASX: RSG)

The Resolute Mining share price has fallen 3.5% to 82 cents. The gold miner’s shares have come under pressure in recent days following the release of an underwhelming third quarter update last week. Resolute’s production was down notably quarter on quarter and its costs jumped meaningfully higher.

More reading

• ASX 200 up 0.3%: Coca-Cola Amatil rockets on takeover approach, Westpac’s $1.2bn earnings hit
• Why the Adairs (ASX:ADH) share price is swinging lower today
• Why the Marley Spoon (ASX:MMM) share price is crashing 17% lower today
• ASX 200 Weekly Wrap: ASX snaps winning streak… just
• These were the worst performing ASX 200 shares last week

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ADAIRS FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why Adore Beauty, Adairs, Marley Spoon, & Resolute shares are dropping lower appeared first on Motley Fool Australia.

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The MGM Wireless Limited (ASX: MWR) share price is soaring today, up 23.08%. At the time of writing, the MGM Wireless share price is trading at 16 cents, compared to its closing price of 13 cents on Friday. There is no official news out of this company today that would explain such a dramatic jump in valuation. However, MGM Wireless has had a particularly eventful month that investors seem to be waking up to today.

What is MGM Wireless?

MGM Wireless is a software company that designs and develops technology and wearable devices, especially for schools and other educational applications. It has no relation to the movie studio of a similar name.

MGM Wireless has been around since 2002, but has had a rather rough trot in recent years. The MGM share price last peaked at 59 cents way back in 2007. It also had a hefty rally in 2018, when it rose to 43 cents per share. However, it’s been pretty much downhill since then. The company was trading as high as 31 cents a share in January. But the coronavirus pandemic has hit the company’s share price hard, with MGM shares falling 77% between 7 January and 25 March. Even so, with today’s rally, MGM has gained nearly 130% since 25 March.

MGM Wireless offers a range of educational software products, including SchoolStar, OutReach and messageyou. These programs are used by schools to communicate school news, broadcast emergency messaging and manage attendance and rollcalls.

Smartwatches hold the key

One of the company’s flagship products is the smartwatch Spacetalk. Spacetalk comes in two varieties: Spacetalk Life and Spacetalk Kids.

Spacetalk Life is a smartwatch designed specifically for seniors. MGM Wireless says that Spacetalk Life is an “all-in-one phone, wristwatch, and GPS” which is a “safe and easy way for our older loved ones to keep in contact with family and friends when they need to”. It also offers features that aim to combat loneliness and isolation, which is particularly pertinent in 2020 for obvious reasons.

Meanwhile, Spacetalk Kids is a similar watch kids can wear to school, which offers location and communication services designed to keep kids safe, without social media apps and other potentially-unsound features for children. The company says “your child can make and receive calls from a set of contacts you choose”, and can also use an SOS option to make emergency calls.

The company sells the kids watch model through two Australian network providers – Telstra Corporation Ltd (ASX: TLS) and TPG Telecom Ltd’s (ASX: TPG) Vodafone. More providers are offered for Spacetalk Life. MGM even inked a deal with Vodafone back in June, which involves Vodafone selling MGM’s watches at its retail stores.

Why has the MGM Wireless share price been exploding?

As I flagged earlier, MGM Wireless has had a few positive developments in recent months, which are likely helping the company’s share price today.

Firstly, MGM told the markets about a month ago that it had inked a deal with United States e-commerce giant Amazon.com, Inc. (NASDAQ: AMZN) to sell its Spacetalk range on its United Kingdom site – amazon.co.uk. Since Amazon is by far the largest e-commerce market in the UK (a large retail market in itself), this deal could prove very lucrative for MGM Wireless if all things go well.

Further, the company also announced earlier this month that it has reached an agreement with Aussie retailing giant JB Hi-Fi Limited (ASX: JBH) to sell its Spacetalk Life models throughout JB’s network of 197 stores in Australia. Importantly, the companies expect the watches to be stocked in time for the Christmas trading season. This is the first time the Spacetalk Life products have been stocked in a physical store.

JB Hi-Fi has already been stocking the Spacetalk Kids models in-store since 2018, but MGM Wireless told investors this new deal was “the result of solid initial sales of Spacetalk Life from the company’s online store, with positive customer reviews and feedback”.

In my opinion, it’s the cumulation of these events that have caused a snowball effect and elicited the excitement we see in the MGM Wireless share price today.

Foolish takeaway

MGM Wireless is a company with a turbulent history. Even so, I think the various events of the past few weeks and months have generated some interesting momentum for the company, so it will be fascinating to see where things end up from here.

More reading

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• Zebit Inc (ASX:ZBT) share price crashes 21% lower following IPO
• Coca-Cola Amatil (ASX:CCL) share price jumps 16% on takeover bid
• Why is everyone talking about Amazon (NASDAQ:AMZN) stock?
• ASX 200 up 0.3%: Coca-Cola Amatil rockets on takeover approach, Westpac’s $1.2bn earnings hit

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Amazon. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post ASX Stock of the Day: MGM Wireless (ASX:MWR) share price soars 23% appeared first on Motley Fool Australia.

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The Infratil Ltd (ASX: IFT) share price is on the rise today after the company announced it plans to acquire up to 60% of Qscan Group Holdings Pty Ltd from Quadrant Private Equity. At the time of writing, the Infratil share price is up 2.66% to $5.40 after reaching as high as $5.55 in morning trade. The potential deal is for a total cash equity consideration of up to $330 million. Qscan is a comprehensive diagnostic imaging practice with locations throughout Australia. The Infratril share price is responding positively to an implied enterprise value (EV) to earnings before interest, taxes, depreciation and amortisation (EBITDA) of 12.7-14.1. 

What’s moving the Infratril share price?

In June 2020, Infratil raised additional equity of NZ$300 million to pursue its growth agenda and take advantage of investment opportunities that may arise. This capital paid down bank facilities and, consequently, can be used to fund the Qscan acquisition, news of which is driving the Infratril share price higher today. Infratil has made the offer in conjunction with the Morrison & Co Growth Infrastructure Fund (MGIF), which has conditionally offered to acquire up to ~15% of Qscan.

Qscan grew from initially operating a single clinic and hospital contract. Today, it is a group operating a portfolio of 70+ clinics across Australia. This includes a network of 10 clinics offering Positron Emission Tomography (PET) in oncology.

The acquisition, if successful, will provide Infratril with a foothold in the very lucrative healthcare diagnostics and imaging sector. At present, the company has invested in defensive shares, such as Tilt Renewables Ltd (ASX: TLT). 

The Qscan investment will be managed by Morrison & Co on behalf of Infratril and MGIF. Moreover, it is conditional on doctor and management shareholders holding the equivalent of ~25% to 32.5% of the business post-close. This therefore requires reinvestment of some of the proceeds into the new holding vehicle. Furthermore, investors in the Infratril share price appear happy with the shared risk, and the diversification into medical imaging. 

Management commentary

Marko Bogoievski, CEO of Infratil said of the acquisition:

Qscan provides a high-quality entry point into a sector with structural long-term growth and potential to scale into a leading healthcare infrastructure platform…

The Diagnostic Imaging sector benefits from long-term demographic tailwinds and technological advances that will allow it to play a growing role in the early detection of diseases such as cancer. Ultimately, increased investment in Diagnostic Imaging will reduce overall healthcare system costs while improving patient outcomes.

Paul Newfield, head of Australia and New Zealand for Morrison & Co, commented:

Qscan is a market leader in a growth industry. It has a secure revenue base backed by strong referral networks. In addition, there is a track record of strong, profitable growth, with significant further growth potential, Qscan is also known for the quality of its Doctors and the strength of their sub-specialty expertise.

More reading

• Why the Infratil (ASX:IFT) share price is on watch today
• ASX renewable vs coal shares: Which will win?

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Infratril (ASX:IFT) share price up on acquisition bid appeared first on Motley Fool Australia.

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Hot on the heels of the Adore Beauty Group Ltd (ASX: ABY) and MyDeal.com.au Ltd (ASX: MYD) IPOs last week, another ecommerce company has hit the ASX boards on Monday.

The Zebit Inc (ASX: ZBT) share price landed on the Australian share market at 11am this morning following the successful completion of its IPO.

Unfortunately, it hasn’t been a very good first day for the US-based e-commerce company’s shares. At the time of writing they are fetching $1.24, down 21.5% from their listing price of $1.58 a share.

The Zebit IPO.

Zebit shares began trading on the ASX today following the successful completion of an IPO which saw the California-based company raise A$35 million at $1.58 a share. This gave Zebit a market cap of approximately $149 million.

The funds raised from the IPO will be used to rapidly accelerate its growth in North America.

Not that it isn’t already growing at a rapid rate. The company’s revenue increased 117.8% from US$20.8 million in 2017 to US$45.3 million in 2018, before rising a further 88.7% in 2019 to US$85.5 million.

What is Zebit?

Zebit is an e-commerce platform with a built-in buy now, pay later offering (BNPL). It has a focus on the large (and growing) proportion of the US population (est. 100 million) that is considered to be credit challenged. 

The company notes that access to affordable credit for this demographic is extremely limited and they wouldn’t qualify for credit cards or even for regular BNPL platforms like Afterpay Limited (ASX: APT) or Sezzle Inc (ASX: SZL).

The company’s Founder and CEO, Marc Schneider, calls his company “the Amazon for the under-served.” He says he knows his customer base better than anyone because, for a large part of his life, he was that customer.

Mr Schneider explained that he and his disabled mother lived in trailer parks for some years and, at one point, were also on the street.

Zebit offers tailored, interest free credit to anyone for up to six months for purchases on the company’s e-commerce platform with minimal credit risk.  This is achieved through a sophisticated algorithm that analyses potential customers and their likelihood of paying up.

More reading

• MyDeal (ASX:MYD) share price rockets 120% higher following IPO
• New $259 million ASX tech player listing Thursday

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Coca-Cola Amatil Ltd (ASX: CCL) share price came out of a trading halt to jump 16.27% this morning, reaching $12.50 before falling back to $12.36 at the time of writing. This came after the soft drink bottler received a takeover bid from Coca-Cola European Partners PLC (NYSE: CCEP), which we discussed at the Motley Fool earlier today here.

How much is the bid?

Coca-Cola European Partners made an offer of $12.75 cash per Coca-Cola share, less any dividends received by shareholders in the second half of 2020. The bidder will also make an offer to American parent, the Coca-Cola Company (NYSE: KO) for the shares it holds indirectly in Coca-Cola Amatil. If negotiations with the Coca-Cola Company are successful, the Coca Cola Amatil board has conditionally stated it will recommend shareholders vote in favour of the offer. This is provided there is no superior offer and that the bid is found to be fair and reasonable, as well as in the best interests of independent shareholders.

A report in the Australian Financial Review says shareholders have labelled the offer “opportunistic” with Coca-Cola Amatil management backing its conditional support for the takeover offer.

How has Coca-Cola Amatil performed lately?

Coca-Cola Amatil also released a trading update for the third quarter of 2020. Volumes in Q3 2020 were down 5.4% on the prior corresponding period (pcp). Volumes for the year to date have also dropped, down 9.7% on the pcp. Third quarter trading revenue was $1,105.9 million, down 4.2%, with year to date trading revenue down 7.6%.

Coca-Cola Amatil had net debt of $1,745 million at Q3 2020, this was down $82 million compared to the prior corresponding period.

The company reported that it had grown market share in Australia, New Zealand and Indonesia.

About the Coca-Cola Amatil share price

Coca-Cola Amatil is a soft drink bottler in the Asia Pacific region, operating in Australia, New Zealand, Indonesia, Papua New Guinea, Fiji and Samoa. The company has been listed on the ASX since 1970.

The Coca-Cola Amatil share price is up 58.69% since its 52-week low of $7.77. It is up 11.89% since the beginning of the year. The Coca-Cola Amatil share price is up 21.82% since this time last year. 

More reading

• ASX 200 up 0.3%: Coca-Cola Amatil rockets on takeover approach, Westpac’s $1.2bn earnings hit
• Why Coca-Cola Amatil, CSR, Link, & Qantas shares are storming higher
• Coca-Cola Amatil (ASX:CCL) in $10 billion takeover bid
• 5 things to watch on the ASX 200 on Monday
• Coca-Cola Amatil (ASX:CCL) share price jumps on M&A speculation

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Amazon.com, Inc.‘s (NASDAQ: AMZN) stock has rallied over 70% this year, making it the hottest stock in the FAANG cohort, which also includes Facebook, Inc. (NASDAQ: FB), Apple Inc. (NASDAQ: AAPL), Netflix Inc (NASDAQ: NFLX), and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).

Wall Street also remains overwhelmingly bullish on Amazon, with an average price target of more than $3,700 per share — which is nearly 20% above its current price. Let’s see why analysts still love Amazon, even after its valuation hit $1.6 trillion, and why its stock could still have room to run.

Amazon Web Services

Amazon’s cloud unit AWS (Amazon Web Services) grew its revenue 31% year-over-year to $21 billion, or 13% of Amazon’s top line, in the first half of 2020. That revenue growth was already robust, but AWS’s operating profit surged 48% to $6.4 billion and accounted for 65% of Amazon’s operating income.

That growth is impressive for two reasons. First, AWS is already the world’s top cloud infrastructure platform with a 31% market share in the second quarter of 2020, according to Canalys, and its continued growth keeps it ahead of competitors like Microsoft Corporation‘s (NASDAQ: MSFT) Azure, Alphabet’s Google Cloud, and Alibaba Group Holding Ltd (NYSE: BABA) Cloud.

Second, most of AWS’ competitors aren’t profitable. Alibaba operates its cloud business at a loss, while many analysts believe Microsoft and Google, which don’t disclose their cloud profits, are likely taking losses. AWS can consistently generate profits because it has a first-mover’s advantage and superior scale.

AWS already serves massive customers like Facebook, Netflix, Twitter Inc (NYSE: TWTR), Walt Disney Co (NYSE: DIS), and multiple government agencies. That well-established customer base and its expanding ecosystem should ensure AWS remains Amazon’s core profit engine for the foreseeable future.

Amazon Prime

Amazon subsidizes the growth of its lower-margin North American unit and its unprofitable international unit with AWS’ profits. That’s the opposite of Alibaba’s business model, which subsidizes the growth of its unprofitable cloud business with its higher-margin core commerce revenue.

AWS’ profits enable Amazon to consistently sell its products at low prices while expanding its ecosystem with brick-and-mortar stores (including Whole Foods and Amazon Go), streaming media platforms, and cheap hardware devices. All those efforts strengthen Amazon Prime, which surpassed 150 million paid members globally at the end of 2019.

Amazon Prime’s discounts, free shipping options, digital services, and other perks lock shoppers into its e-commerce ecosystem and prevent them from buying products from rival retailers. Therefore, Prime’s growth buoys the long-term expansion of Amazon’s online marketplaces, which still generate the lion’s share of its revenue.

The pandemic is generating tailwinds instead of headwinds

Amazon’s cloud and e-commerce businesses were already flourishing before the pandemic, but the crisis lit a fire under both businesses.

As more people stayed at home and worked remotely and accessed more online services, demand for AWS’ services climbed across multiple industries. As brick-and-mortar stores shut down, shoppers bought more products from Amazon’s e-commerce marketplaces.

Amazon initially warned that COVID-19 expenses would curb its earnings growth in the second quarter. But its revenue still rose 34% year over year in the first half of 2020, compared to 20% growth in 2019, and that accelerating revenue growth offset its higher expenses. As a result, Amazon’s net income still grew by 26% as its earnings per share (EPS) rose 24%.

Amazon expects its revenue to rise 24%-33% year-over-year in the third quarter. Analysts expect its revenue and earnings to rise 32% and 38%, respectively, for the full year. Those rosy estimates indicate Amazon remains a solid investment for both pandemic-stricken and post-pandemic markets.

It’s still reasonably valued

Amazon trades at 58 times forward earnings. That valuation might seem frothy relative to other retailers, but it’s a bargain compared to other high-growth cloud companies.

Moreover, Amazon’s dominance of the cloud and e-commerce markets, the resilience of those businesses throughout the pandemic, and the ongoing expansion of its ecosystem all justify that slight premium. That’s why Amazon will likely remain a top stock to own for long-term investors.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• 3 reasons you should buy Amazon stock before there’s a coronavirus vaccine
• Amazon Earnings: What to Watch on Thursday, Oct. 29
• 3 ASX tech shares that pay dividends
• Is Apple (NASDAQ:AAPL) stock overvalued?
• Why the Buddy (ASX:BUD) share price is up today

Leo Sun owns shares of Amazon, Apple, Facebook, and Walt Disney. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alibaba Group Holding Ltd., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Facebook, Microsoft, Netflix, Twitter, and Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney, long January 2022 $1920 calls on Amazon, short January 2021 $115 calls on Microsoft, long January 2021 $85 calls on Microsoft, and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Facebook, Netflix, and Walt Disney. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why is everyone talking about Amazon (NASDAQ:AMZN) stock? appeared first on Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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